Indian Toy Industry: Exports Witnessed Significant Growth | PWOnlyIAS 2023

Context:

• This article is based on an Editorial “Unboxing the ‘export turnaround’ in India’s toy story” which was published in the Hindu. India’s toy trade industry has experienced a remarkable transformation, shifting from being a major toy importer to becoming a net toy exporter in recent years.

Factors Driving the Toy Industry Export Surge

• This turnaround marks a significant achievement and is attributed to the government’s “Make in India” initiative and supportive policies.
• Make in India Initiative:
  • Self-reliant: Launched in 2014 to boost domestic manufacturing and make India self-reliant across various sectors, including toys.
  • Improve Production and Competitiveness: This initiative encouraged Indian toy manufacturers to increase production,  increased formalization and improve competitiveness.
    • However, the sustainability of output, investment, and productivity gains varied across different segments of the toy industry.
• Government Support and Policy Measures:
  • Implementation of Policy Measures: Like higher custom duties and non-tariff barriers to protect and promote domestic toy production.

Historical Challenges and Trends related to Toy Industry

• Industry Size and Productivity: In 2015-16, India’s toy industry had around 15,000 companies or establishments, employing 35,000 workers. 
  • However, the industry experienced a decline in output and job losses between 2000 and 2016.
• Impact of Policy Reforms:
  • Reservation Policy and its Abolition:
    • India’s previous industrial policy focused on protecting domestic production through a reservation policy.
    • However, this policy hindered the growth of the toy manufacturing sector.
    • In 1997, the reservation policy was abolished, allowing new firms to enter the organized sector. However, challenges persisted in the unorganized sector.

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Concerns: Examining Sustainability and Future Outlook related to Toy Industry

• Protectionism vs. Sustainable Growth: The recent surge in toy exports may be influenced by protectionist measures such as higher custom duties and non-tariff barriers.
  • However, long-term growth and competitiveness require investments in infrastructure, technology, and skill development.
• Role of COVID-19 Pandemic: The global supply chain disruptions caused by the COVID-19 pandemic may have impacted the dynamics of the toy trade.
  • It is important to assess the long-term effects and sustainability of the export surge beyond the exceptional circumstances of the pandemic.

Conclusion:

India’s transition from being a major toy importer to becoming a net toy exporter is a significant achievement for the country’s toy industry. The Make in India initiative and policy reforms have contributed to this turnaround, but sustained growth and competitiveness require ongoing investments and strategic measures.